Core Insights - The author possesses a strong academic background in economics and politics, emphasizing economic development, and has 36 years of executive management experience in the insurance and reinsurance sectors, particularly in Global and Asia Pacific markets, as well as expertise in climate change and ESG [1]. Group 1 - The author has extensive knowledge in the insurance and reinsurance industries, which is critical for understanding market dynamics and investment opportunities [1]. - The focus on climate change and ESG indicates a growing trend in investment strategies that prioritize sustainability and environmental responsibility [1].

Core Insights - Kemper experienced a significant decline in stock value, with shares dropping over 14% following its latest earnings release, contrasting sharply with the S&P 500's 1.1% dip [1] Financial Performance - The company reported total revenue of nearly $1.24 billion for the third quarter, marking a 5% increase compared to the same period in 2024, primarily driven by a 6% rise in earned premiums to $1.13 billion [2] - However, Kemper's net operating income, not in accordance with GAAP, fell dramatically to $20.4 million ($0.33 per share) from $105 million in the previous year, significantly missing the consensus analyst estimate of $1.33 per share [3] Challenges - The decline in profitability was mainly attributed to the specialty property and casualty line, which suffered from higher adverse prior year developments on bodily injury coverages within commercial automobile insurance, despite some offset from growth in earned premiums due to rate increases [4][5]

What Happened? Shares of insurance holding company Kemper (NYSE:KMPR) fell 15.6% in the morning session after the company reported disappointing third-quarter 2025 financial results, highlighted by a significant miss on profitability. Kemper's adjusted earnings of $0.33 per share missed Wall Street's expectations of $1.32 by 75%. The weak profitability stemmed from poor underwriting performance, as the company's combined ratio came in at 99.6%. A combined ratio measures total underwriting costs and claims ...

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Earnings Performance - Kemper reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $1.33 per share, and down from $1.62 per share a year ago, representing an earnings surprise of -75.19% [1] - The company posted revenues of $1.24 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.79%, compared to year-ago revenues of $1.18 billion [2] Stock Performance - Kemper shares have lost about 34.2% since the beginning of the year, while the S&P 500 has gained 15.1% [3] - The current Zacks Rank for Kemper is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $1.23 on $1.23 billion in revenues, and $5.56 on $4.86 billion in revenues for the current fiscal year [7] - The outlook for the industry, specifically the Insurance - Multi line sector, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8] Industry Context - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - Oscar Health, Inc., another company in the same industry, is expected to report a quarterly loss of $0.55 per share, with revenues projected to be $3.09 billion, up 27.5% from the year-ago quarter [9][10]

Financial Performance - Total revenues for the three months ended September 30, 2025, were $1,239.7 million, an increase from $1,178.9 million for the same period in 2024, representing a growth of 5.2%[23] - Earned premiums for the nine months ended September 30, 2025, reached $3,352.0 million, compared to $3,134.1 million for the same period in 2024, reflecting a year-over-year increase of 7.0%[23] - Net (loss) income attributable to Kemper Corporation for the three months ended September 30, 2025, was $(21.0) million, a decrease from $73.7 million in the same period of 2024[23] - For the three months ended September 30, 2025, Kemper Corporation reported a net loss of $24.2 million, compared to a net income of $72.2 million for the same period in 2024[24] - Total comprehensive income for the nine months ended September 30, 2025, was $220.3 million, down from $325.1 million in the same period of 2024[24] - For the nine months ended September 30, 2025, the net income was $142.6 million, a decrease from $216.8 million for the same period in 2024, reflecting a decline of approximately 34.2%[39] Expenses and Losses - Total expenses for the three months ended September 30, 2025, were $1,272.8 million, compared to $1,088.2 million for the same period in 2024, marking an increase of 16.9%[23] - Policyholders' benefits and incurred losses and loss adjustment expenses for the three months ended September 30, 2025, were $924.6 million, up from $769.3 million in the same period of 2024, indicating a rise of 20.2%[23] - The company reported a net investment income of $104.8 million for the three months ended September 30, 2025, down from $111.1 million in the same period of 2024, a decline of 5.0%[23] - The company experienced a remeasurement loss related to the deferred profit liability within the Life insurance business of $0.9 million for the three months ended September 30, 2025[23] Assets and Liabilities - The company's total assets decreased to $12,443.4 million as of September 30, 2025, from $12,630.4 million at the end of 2024[27] - Insurance reserves increased to $6,123.6 million as of September 30, 2025, compared to $5,811.6 million at December 31, 2024, reflecting a growth of 5.3%[30] - Kemper's total investments decreased to $8,602.6 million as of September 30, 2025, from $8,888.5 million at December 31, 2024[27] - The company's long-term debt remained stable at approximately $943.1 million as of September 30, 2025, compared to $941.7 million at December 31, 2024[30] - Kemper Corporation's shareholders' equity decreased to $2,721.6 million as of September 30, 2025, from $2,784.3 million at the end of 2024[30] Shareholder Actions - Cash dividends paid to shareholders for the three months ended September 30, 2025, amounted to $19.7 million, with a dividend of $0.32 per share, compared to $20.3 million and $0.31 per share in the same period of 2024[38] - The number of common shares outstanding decreased from 64.4 million as of June 30, 2024, to 60.2 million as of September 30, 2025, representing a reduction of approximately 6.5%[39] - The company repurchased common stock totaling $218.8 million during the three months ended September 30, 2025, compared to $25.0 million in the same period of 2024[38] Regulatory and Competitive Environment - The company anticipates continued challenges in the regulatory environment and increased competition affecting future performance[12] - Kemper is focused on integrating acquired businesses and implementing significant operational changes to enhance efficiency and competitiveness[19] Investment Performance - The allowance for credit losses on fixed maturities increased to $15.7 million in 2025 from $10.7 million in 2024[27] - The company reported a comprehensive loss of $227.1 million as of September 30, 2025, compared to a comprehensive loss of $252.5 million as of September 30, 2024, indicating an improvement in overall financial health[39] - The total fixed maturities investments amounted to $4,939.1 million, with unrealized losses of $728.0 million, including $793.8 million in fair value for less than 12 months and $4,145.3 million for 12 months or longer[75] Taxation - For the three months ended September 30, 2025, the income tax benefit was $7.9 million, or 27.3% of income before income taxes, compared to an expense of $18.9 million, or 20.4% for the same period in 2024[186] - The company has no unrecognized tax benefits as of September 30, 2025, and no liabilities for accrued interest and penalties for the nine months ended September 30, 2025[187] Legal and Compliance - The company is involved in legal proceedings but does not believe any pending legal matters will materially affect its financial statements[189] - There have been no material changes to the company's disclosures about market risk since the 2024 Annual Report[316]

Financial Performance - Total revenues for Q3 2025 were $1,239.7 million, an increase from $1,225.6 million in Q2 2025, and $1,193.0 million in Q3 2024, reflecting a year-over-year growth of 3.9%[7] - Earned premiums for Q3 2025 reached $1,133.3 million, slightly up from $1,130.8 million in Q2 2025 and significantly higher than $1,087.9 million in Q3 2024, indicating a year-over-year increase of 4.2%[7] - Net (loss) income attributable to Kemper Corporation for Q3 2025 was $(21.0) million, compared to a profit of $72.6 million in Q2 2025 and $99.7 million in Q3 2024, showing a significant decline[7] - Adjusted consolidated net operating income for Q3 2025 was $20.4 million, down from $84.1 million in Q2 2025 and $106.4 million in Q3 2024, reflecting a decrease of 75.8% year-over-year[7] - Total expenses for the three months ended September 30, 2025, were $1,272.8 million, an increase from $1,138.1 million in the prior quarter, marking an 11.8% rise[13] - The company reported a net loss attributable to Kemper Corporation of $21.0 million for the three months ended September 30, 2025, compared to a net income of $72.6 million in the previous quarter[29] - Adjusted Consolidated Net Operating Income for the three months ended September 30, 2025, was $20.4 million, a decrease from $105.0 million for the same period in 2024[65] Assets and Liabilities - Total assets as of September 30, 2025, were $12,443.4 million, a decrease from $12,601.1 million at the end of Q2 2025[11] - Total liabilities decreased to $9,721.8 million as of September 30, 2025, down from $10,102.6 million a year earlier, a reduction of 3.8%[17] - Total shareholders' equity was $2,721.6 million as of September 30, 2025, compared to $2,770.4 million a year prior, indicating a decline of 1.8%[17] - The debt to total capitalization ratio was 25.7% as of September 30, 2025, up from 24.2% in Q2 2025, suggesting an increase in leverage[11] - Long-term debt remained stable at approximately $943.1 million as of September 30, 2025, consistent with previous quarters[17] Investment Performance - Total investments as of September 30, 2025, amounted to $8,602.6 million, a decrease from $8,645.5 million at the end of the previous quarter[15] - Net investment income for the nine months ended September 30, 2025, was $301.9 million, slightly down from $304.5 million in the same period last year[49] - The company reported net realized investment gains of $3.9 million for the three months ended September 30, 2025, compared to a loss of $0.1 million in the previous quarter[49] - The company experienced a net realized investment loss of $4.7 million for the nine months ended September 30, 2025, compared to a loss of $9.2 million in the same period of 2024[19] Insurance Operations - Insurance reserves increased to $6,123.6 million as of September 30, 2025, compared to $5,900.0 million in Q2 2025, indicating a rise in claims reserves[11] - Policyholders' benefits and incurred losses for the three months ended September 30, 2025, were $924.6 million, compared to $829.1 million in the previous quarter, reflecting an increase of 11.5%[13] - The Combined Ratio for Q3 2025 was reported at 104.8%, compared to 95.4% in Q2 2025, showing a significant deterioration in underwriting performance[37] - Current Year Non-catastrophe Losses and LAE Ratio for Q3 2025 was 78.5%, up from 72.3% in Q2 2025, indicating higher loss costs[37] Shareholder Information - Book value per share decreased to $45.38 as of September 30, 2025, down from $46.45 in Q2 2025, indicating a decline in shareholder equity value[11] - Dividends paid to shareholders per share remained stable at $0.32 for Q3 2025, consistent with the previous quarter[11] - Cash Dividends Paid were $19.7 million, down from $20.8 million in the previous quarter, a decrease of 5.3%[23] - The return on shareholders' equity for Q3 2025 was (3.0)%, a significant drop from 9.9% in Q2 2025, reflecting poor financial performance[11] Operational Changes - The company launched a restructuring program in Q3 2025 aimed at achieving operational and organizational efficiencies, with ongoing evaluations through 2027[62] - The company aims to fully exit its Preferred Insurance business, which is classified under Non-Core Operations[62] Segment Performance - Specialty Property & Casualty Insurance earned premiums reached $1,017.3 million, compared to $1,010.8 million in the prior quarter, reflecting a growth of 0.5%[27] - Total Segment Adjusted Operating Income decreased to $30.0 million from $113.2 million in the previous quarter, representing a decline of 73.5%[29] - Net Premiums Written for Q3 2025 reached $982.2 million, a decrease from $1,001.5 million in Q2 2025[37] - Total Revenues for the Specialty Property & Casualty Insurance Segment reached $252.4 million in Q3 2025, compared to $206.8 million in Q3 2024, reflecting a 22.0% increase[41]

Core Insights - Kemper Corporation has appointed C. Thomas Evans, Jr. as Interim CEO following the departure of Joseph P. Lacher, Jr. after nearly a decade in leadership [1][2] - Lacher will remain in an advisory role until the end of the year to assist with the transition, while the Board has initiated a search for a new CEO [2] - Evans has extensive experience with Kemper, having been with the company since 1992 and held multiple leadership positions [3] Leadership Transition - Joseph P. Lacher, Jr. has stepped down from his roles as President and CEO and will also leave the Board of Directors immediately [2] - Gerry Laderman, Chairman of the Board, expressed gratitude for Lacher's decade of leadership and support during challenging times, including the COVID-19 pandemic [4] - The Board is focused on finding a new CEO to lead Kemper into a phase of profitable growth and is confident in the current team's ability to execute strategic priorities [5] Future Outlook - Lacher expressed confidence in Kemper's potential for sustained, profitable growth and thanked stakeholders for their support during his tenure [5] - Evans emphasized his commitment to working closely with the Board and management team during the transition and highlighted Kemper's solid foundation and competitive advantages [5] - A financial update is expected during the third-quarter earnings call in early November [5]

Core Points - Kemper Corporation announced the resignation of Joseph P. Lacher, Jr. as President and CEO after nearly a decade in the role [1] - Lacher will continue to support the company in an advisory capacity until the end of the year to facilitate the transition [1] - The Board of Directors has formed a search committee to begin the process of identifying a new CEO [1]

Core Insights - Kemper Corporation (NYSE:KMPR) has been identified as one of the oversold financial stocks to buy according to hedge funds, despite posting mixed results for its fiscal second quarter of 2025 [1] - The company's share price has decreased by 18.49% since the earnings announcement, yet Wall Street analysts remain optimistic about the stock [1] Financial Performance - Kemper Corporation reported a revenue of $1.23 billion, reflecting an 8.92% year-over-year increase and surpassing consensus estimates by $2.43 million [2] - The earnings per share (EPS) of $1.30 fell short of expectations by $0.21 [2] - The company achieved a trailing 12-month operating cash flow of $590 million, marking an all-time high [2] - Return on equity (ROE) was reported at 10%, with an adjusted ROE of 15%, while book value per share (BVPS) increased by 12% during the same period [2] Analyst Ratings - Following the earnings announcement, Andrew Kligerman from TD Cowen reiterated a Buy rating on Kemper Corporation with a price target of $81 [3] - Gregory Peters from Raymond James also maintained a Buy rating with a price target of $60 [3] - Kemper Corporation operates as a diversified insurance holding company, providing property and casualty insurance as well as life insurance through its subsidiaries [3]